managers are convicted following a sweep the fbi had dubbed operation perfect hedge. it highlighted how a group of ties to steven cohen have been pursued over insider trading. and in corporate news, a u.s. investigation finds more evidence about how walmart used payoffs allegedly in mexico to advance its gold down there. it's tuesday, december 18th, 2012. "squawk box" begins right now. good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this hour is julia sed. fiscal cliff negotiations, our top story. now president obama is proposing leaving lower tax rates in place

for everyone except those earning $400,000 and above. that's above the $250,000 threshold that the president has been demanding for months, but it is still far from speaker john boehner's request of $1 million. a source familiar with the talk says this is by no means the final offer for the white house. the move by the president was welcomed, albeit with some reservations. we will talk about the latest developments in just a few minutes. in the meantime, the global markets seem to be taking note of the optimism. you can see right now that those dow futures are up by 54 points. this comes after a decent rally for the markets yesterday. s&p futures at this point are up by better than seven points and the nasdaq futures up, as well, by about 17. european shares rising. germany is up, the ftse is up, the france, the cac in france has turned slightly down. but, again, this is a marginal loss of about three points. most of the major asian stock

markets were higher overnight. and among the catalyst here, signs that china's recovery is gaining traction. sources say that the bank of japan will ease monetary policy this week and consider adopting a 2% inflation target no later than january. policymakers are seen responding to pressure from the incoming prime minister there. shinzo abe for stronger efforts to beat deflation. in the meantime, india's central bank kept interest rates on hold yesterday ignoring pressure to reduce borrowing costs. policymakers said they were shifting the focus to reducing the economy and that raises the odds of a rate cut as early as january. andrew olson, over to you. >> ubs reportedly nearing a fine of up to $1.5 billion. the bank is close to finalizing a deal with regulators according to the financial times. about three dozen bankers and senior managers are said to face criminal or civil charges. and it's official this morning, tend of an era for aig.

details emerged during squawk yesterday. today, the u.s. insurer rates $6.5 billion from the sale of its remaining stake in aia group. and boeing is raising its dividend by 10%. it will resume share purchases in 2009. the quarterly dividend of 48.5 cents a share will be reportedly on march 8th. boeing will not join the list of companies giving dividends this month to avoid the possibility of tax increase earlier in the year. and then we have a federal judge denying requests by apple to ban u.s. samsung smartphone models sales. the request came after a judge said samsung illegally used apple technology at that time. finally, morgan stanley will pay a $5 million fine to massachusetts for violating securities laws.

morgan was the lead underwriter for facebook's ipo, massachusetts topped that a top morgan stanley banker had improperly coached facebook on how to disclose financial information. >> wasn't there something like a hand written script? >> there was a handwritten script to the analyst. lots to talk about. >> walmart. >> joe, what have you got over there? >> it's malfeasance. >> i think it's a -- >> are you ready to use that word? >> the headline is bribery. tell the audience what we're talking about. >> the front page article on the "new york times" is titled bribery aisle. it's about walmart and the mechanics cal can business that was aggressive and creative and a corrupter offering large payoffs to get what the law otherwise prohibited. the times reports that the retailer wanted to build a store in an alfalfa field in a town's main entrance which was barely a mile from some ancient pyramids.

the town's elected leaders had prevented the new zoning map that would have prevented it. walmart officials decided to undo the damage by a well played bribe and the guy drawing the map drew it a little differently. >> that's exactly what happened. they found the old map and the new map. they found a disk in a shoe box showing the differences. it was incredible. >> the zoning map would not become law until it was published in a government newspaper, so walmart reportedly arranged to bribe an official to change the map before it was sent to the newspaper. walmart issued a statement saying the allegations are part of that company's ongoing investigation of the last "new york times" piece. >> that wasn't a denial. >> no. but we knew about this. and then, you did this -- did you -- when you were calling cerberus to get background on the piece, they knew you were going to write the piece.

is that what happened? >> well, let me tell you what happened and we can go through some of the back story. cerberus saying this morning, overnight about 2:30 in the morning that it is immediately going to bin selling its investment in gunmaker freedom group in light of last week's school shooting in newtown, connecticut. it did have a stake in freedom group. it has invested $751.4 million as of the end of march. cerberus acquired bushmaster last year. and my column today focuses on the number of private equity firms that have major stakes in gunmakers. colt, by the way, is another that is one of them. mid ocean owns a piece of

bushnell. doesn't make guns, makes everything but the gun itself. >> what do you mean, the components? >> if you want a 25 round magazine loader, they have it. if you want a military grade night vision, they have it. if you need laser guided things, that's what they make. >> but if you look at the numbers, the sales of a lot of these gunmakers, freedom group in particular have been rising sharply. and, you know, the day after -- >> and the automatic rifle, that's where the growth is coming from. >> absolutely. the day after president obama was elected, you saw a sharp jump in sales. >> i should say as of last night when i was working on this piece, there was a a briefly statement been eliot spitzer wrote an item on his blog. at the time, it was not clear that you will that they were going to take any action. there was a question about whether they should be donating money to education programs.

clearly overnight -- >> they're putting it up for sale. >> let me read what they sale. they said it's apparent that the ansi hook tragedy has raised questions regarding gun control to a new level. our role is to take positions for investments. it is not our role to take a role regarding gun control. >> they're going to take a hit on it right now, too. >> i imagine they will. >> not the best time to be selling. >> in truth, it looks like it's been quite a successful investment for them. again, will there be a tremendous discount selling? >> right. >> you don't know. but given that other teachers pensions and others did have stakes in this and probably are now saying, we've got to get out of here, this is --

>> they sold it probably law enforcement agencies and the military. >> absolutely. and i should say colt defense, which i had mentioned earlier, blackstone has a piece of that. there are a number of pieces that fit into that. that is a military grade company. they do that for law enforcement. that's not for the public. however, people worry that some of those firearms ultimately -- >> and calcet as a result had a 6% stakes in this country. >> unfortunately the criminals don't read the laws that closely a lot of times. and if you're manufacturing them for people that are bona fide defenders or military or whatever, then -- >> well, it's certainly not the only thing that needs to be done as the question about spending on mental health has been a huge one, too. >> yes. dan, he was the first person to identify the investor.

his phone call initially made earlier to them inspired some of this, as well. >> but that was a very quick turn of events. >> very quick. >> there's the guys who got aide from the nra, and others are talking about this changed my mind. >> we have senator bob corker on a little later this morning, too. and we can talk to him about that. he's a big defender of gun rights, particularly in his state of tennessee. >> we did show you the futures. they are indicated higher. you can see right now the dow futures up by 6 points. the nasdaq is up by just about 13 points. we've been watching oil prices this morning, as well. oil prices are up about 50 cents. you take a look at the ten-year, the ten-year note is yielding 7 of 68%. and the dollar this morning is down across the board. euro is trading at 1 is 31.79.

the dollar/yen is at 83.86. gold prices have barely budged. they're up about 1.80 to $1700 an ounce. >> maybe kelly knows, that euro, is that a six-month high? >> well, yeah. >> you guys have to keep up. you're not keeping up. you guys have to print. let's go here. >> one of the aggressions after japanese elections, now the bank of japan is under huge pressure to bring more quantitative easing and much more stimulus. one big question is are we going to see the eurozone rs theed to copy that and we're going to see 2013 with quantitative easing. >> it's your problem over there and we're doing our part to help you. >> david tepper, interesting, he said yesterday we missed it when we didn't see the ecb signaling that it could be just as quick to lower rates, too. if that's the case, you wonder why the euro has been so strong against the dollar.

>> they haven't yet. >> they haven't, but they're ready at any time. >> we are. we were going to talk about it, then we did it with 40 billion. then we said, you know what? 40 billion for a year isn't going to do it, but we're going to do 85 billion forever. >> mario draghi is involved with a subtle game of dancing. every time it looks like the system is going to go over the edge, essentially the ecb steps in to try and pull them in from the brink and calm the markets. but he doesn't want to have too much of an atmosphere. >> why not lower rates? that's part of the german situation? >> it's part of that. also, wepts to keep the next flare-up for hopping. >> so we should be agraze because he sees something bad coming down the road. >> i think it's more avenue a question they know they want to keep up with the politicians. at the same time, they don't want a full blown crisis.

>> wouldn't that help if you exported something? that's the whole point, isn't it? you're exacerbating your crummy economies. >> yeah. but the issue, as far as nor the economies, you're dealing with a mixed bag of different economies inside that eurozone, trying to find one single policy is pretty tough. >> why don't we bring in kelly evans right now. kelly is standing by in london. kelly, maybe you can shed more light on this, as well. >> naung. hi. julia just put her finger on it. this comes down to all those diverse economies within the eurozone. if you think about the fact that the dax in germany is one of the best asset classes in the world, up something like 30%, and consider monetary policy. it's extremely different. that's the real nub. and in an interesting and almost unfortunate way, the weaker germany looks from here, the more likely the ecb is going to cut rates.

remembering the history, the psyche of the germans who are very reluctant to pursue policies that they think would incite internal inflation explains how complicated this situation is for mario draghi. it's one reason why i highlighted that story of the day for you guys. he was looking for a 6.5% wage increase. we're starting to see rebalancing towards the german consumer and towards germany as powering the eurozone forward, but remining as that happens, it means the prospect for outright rate cuts is less. if we can flip ahead through the stock boards and show i wyou whs going on with currencies, we had a generally positive session overnight. over here, despite the aussie/dollar outperforming, the euro/dollar adding 0.15% too just high of 1.32. it is extraordinary. in an overnight session with very little else going on we

minds you, if this is the setup we see going on next year, there are a lot of countries across europe that would love a weaker currency, but may not get it under current conditions. let's turn back to the latest developments in the fiscal cliff negotiations. jillian is on the set with us and you'll be here with us for the rest of the hour. we finally have movement. >> this is a cliffhanger. i think it's going to carry on for another couple days. >> that's a much better outcome. today is tuesday, isn't it? >> they don't want to spend christmas in washington, do they? >> you have thursday, friday and monday, right? >> you have a lot of aides prepared to come back after christmas to try and make sure they're not too far away from d.c. it does look encouraging. you've had movements on both sides. you've had boehner indicating that he's willing to accept and

rising tax rate for the wealthiest. at the same time, you've had the president scaling back the limit to which those tax rates go up the. >> and they're not arguing about idealogical points any more. >> exactly. >> and what about the debt ceiling? do you think this gets thrown to the mix or not? >> well, i think the white house knows very strongly that as far as the markets are concerned, they want to try and get some kind of clarity for the next few months. after the last couple of years, no one really trusts the government or trusts the administration to not have a series of crisis and tiptoeing to the edge. so my bet is they will try to get some sort of deal. >> who has more trouble convincing the people they need to sign off? boehner could get enough with democrats and then you get a few republicans in the house. but obama has to get the -- the cost of living, he made a major concession there. >> absolutely.

it's always a good news that both sides are dealing with fracturus situations internally. >> part of it is just the way that the -- how they think he caved the last time. do you think they're satisfied that he's held out long enough this time? >> i think there's probably a better chance this time around. but you've had issues like raising the medicare age. >> you won't get your payroll tax cut, either. >> no. and you should not be looking at a time in the medicare age. you should be looking at payroll cuts, instead. that's a real issue. >> theorizing above a little bit. i think the campaign is taking hold. i think they finally turned on cnbc and saw it and said, you know what? these guys have a point. >> the one thing that's crystal clear is if they do get a deal done in the next week or so, this will be a very big christmas present for the

markets. right now, there is so much money sitting on the side lines, not junk among big american companies. you had ge's jeff immelt come out yesterday indicating yet again so much as investment is being put on the side while people are waiting for clarity and investors that have been running away from the stock market for the last few weeks could come back again if they think there's some kind of deal. if you look at the figures yesterday, you had about $240 billion going into bond funds so far this year. you've had 127 coming out of equity funds and that's partly because of the concern about where we're going with the economy, but also fiscal cliff. so there is real potential for pent up demand going into the market if people begin to trust that actually a framework has been put in place and a bit of political sanity has suddenly broken out. >> that could be a big christmas present. >> we were all obsessed with this, cliff, cliff, cliff, cliff, cliff, and then newtown hits, as well. and it's like, what are we

talking about? we're talking about two points of some -- it's like wage -- you know, there's things that are much less important at that point. and, you know, it's like just do it, would you? and let's move on and then try and figure out some of these other stuff. i honestly think that that in some way made it seem so trivial. you would think it was the end of the world. >> wasn't there a piece in the times, the journal yesterday that said the situation in newtown might have brought some of the legislators in washington together. >> that's what i'm saying. >> they have something that they can share, a common horror. >> something that -- you know. really, it was like this was all we could talk about breathlessly. that the world can't go on with -- so -- >> family situation. >> get your priorities straight. >> when you've had two parents rallying all day long about something domestic, who is going to take out the trash and

suddenly a tragedy happens it brings everyone together. >> let's hope for that. we're going to continue to talk about all these issues this morning. we have a number of big guests to talk about not only what is happening with the markets, but gun control and that issue, too. >> it's only money, right? >> that's true. >> and a lot of us have a lot to be thankful for and this reminds us of that. when we come back, fox con is confirming that it has plans for a sed set country in india. but first, the hawaii senator daniel inouye died at the age of 8837 he's a veteran and war hero. he was the senate pro item.

welcome back to squawk this morning. applemaker is confirming plans for a hand set factory in indonesia. foxconn now saying no timeline has been set. it would cost $5 billion to $10 billion following worker deaths, sudz and other things foxconn and apple has set pledged to bridge a new building steemt.

leo g ray kowski is the asset managements. really, leo? do you oversee $178 billion? >> i have a lot of help, swroe. >> that sounds like you would have a lot more wrinkles and look a lot more haggard if you had that responsibility. if we get a cliff deal which is looking closer, are our problems over in terms of this sort of market that's been stuck in the mud for a decade, do you think? >> i think a lot depends on time frame, but no is the short answer to your question. i think, you know, markets being discounting mechanisms, i think it's very unlikely that here in the short-term, we get the type of meaningful entitlement reform and a thoughtful and cogent tax code that businesses and individuals can rely on for many, many years. i think that's what will provide us some multiple expansion. so i think we'll get a relief and this is certainly heading in the right direction.

but i think in terms of the -- you know, the ten years forward, we still have a fair amount of work to do. >> we might get a down payment and a promise to do something within a year on those other -- we noticed the cliff is followed by our long-term problems and it seems like we focus now a public attention on our long-term structural problems which need to be addressed. we're probably close to actually doing some at this point, even if it's in a year than before. will that be enough? there's a lot of corporate cash on the sidelines, isn't there? >> there sure is. $2.6 trillion the last time i checked, earning zero or close to zero. as was mentioned before the break, you know, a lot of money has found its way into bond funds, including short and safe funds like incidenter immediate term bond funds. so we've been warning clients and other investors that at a 177 yield, all it takes is a back up to a 2.25 on the ten-year and over the course of

the next 12 months, we have a money losing investment. so i think investors have certainly been very cynical, justifiably skeptical. that's kept a lot of money in cash and even the cash that's been put to work has been put to work in short-term bonds. that could be a very unrewarding after tax real return over the next couple of years. >> could you really write a story with a happy ending where, you know, we do make some progress, the market looks better, corporations free up some of that cash, unemployment comes down and the fed really just had a bridge if it's not qe perpetual that it could start exiting? right now, i think one of the worries is if there's a new -- i think it's kaud a in the ru, but if the new normal is above 6.5%, we've got permanent fed. it would be knenice the fiscal congress, with if we could free that up and take the onus off those guys.

can that happen? >> i think it can happen and it's start to go happen at least directionally. hope is not a strategy, but i think it's certainly more hopeful than -- all right. >> we've had got a target of 1550 s&p and i think that could be a conservative target. >> all right. you better get going. we understand. >> thanks, joe. >> when we come back, we'll have more on this story about walmart and the allegations of bribery. stick around. we'll be back. [ penélope ] i found the best cafe in the world.

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. our top stories this morning, the fiscal cliff and negotiations which seem to be moving forward. i'm afraid to say too much. steve liesman reports that the white house is now proposing leaving lower tax rates in place for everyone except those earning $400,000 and above. yeah. i read that everywhere. liesman? liesman is agreeing with what is written everywhere? that's excellent, steve. good job. that's up from $250,000 and did you know? no one else cited him. they need to cite him. i don't like it when they don't. >> they should. >> the president has been demanding for months, it's a little above the $250,000. it's still below the $1 million that john boehner wants. we've been saying all along it probably goes up to 500. >> maybe you get up to 650 at this point. >> and then we have to decide,

does it go back to 39.6? >> yeah. i had seen yesterday that there was some commentary -- is it 39.6 or 39-7? >> 29en 6 of. >> some commentary that john boehner has said okay on the 39 39.6. >> and the president said for two years. they would like to do it by christmas. i think that would be nice if they did it by christmas. you're watching "it's a wonderful life." and you realize that both sides rose above and did what was right? >> wouldn't that be nice? >> time to have pulled out this big -- >> would we actually say that it was "squawk box" that it did it? >> do we have ins for boehner and the president? that would be nice. where is yours? oh, yeah, i meant to wear it. i have like four of them. i bring it up. i put one on here and then i take it off and then i forget to bring it down the next day.

>> i have to give you credit and becky, we've always been rising above for the laugh few days. >> you're not saying anything other than just, you know, let's do something. >> let's get it together. >> right. we're not saying obama cave or boehner cave. >> just grow up and talk to each other. exactly. govern. >> not too much. >> it is that time again. this is when year-end investment decisions and forecast for us nrt yenext year. tim keenen is with us this morning. he's managing director and head of finance at blackrock. also kevin ferry of cronus futures management is standing by at the cme. jim, start off by telling us where you see the bond market. we've had some raging debates about whether the bond market at this point is overvalued, how it matches up against the stock market. yesterday we spoke with david

tepper who said it's richly valued, compared to where the stock market is valued. what do you think about that? >> i think we have to separate the markets we're going the talk about with regards to the credit yield and the high yield and loan markets. those two markets are more tied towards the health of the economy. i would think about those as you're investing in equity wes put options. the bond market and where that is overvalued i think is more talking about the u.s. treasury markets and how low yields are across the curve. high yield, corporate america, still around 6.5% and loans are around 5% and a more short duration assets. she should be trading at the higher end of the market. when when we talked to david tepper, he said equities are the better value at this point. would you agree with that? >> yeah.

i think if we get past this fiscal plan, all likelihood is next year will be a positive year. think about what can drive equity returns next year, it will be more about multiple expansion. he think there will be some leverage growth. where are you going the drive equity returns will be if multiples increase and really drive equity valuations. the high yield market in a lower growth stable market is going to get you good, stable returns with a lot less volatility. we do like some equities here, but we also like the credit markets and the loan markets. >> kevin, why doebts you weigh in on where things stand right now. we know what the fed is doing at this point. if washington gets its act together and we see some sort of an agreement, does that change the situation drastically? >> well, the market moved in the past week in that direction. though fairly significantly in the last five sessions for the bond market have been very

debilitating. it is a strong concession. i would say functionally, the street is percentaging inventory. so even though the fed is still on a big program that continues to buy, the street is purging down inventory hard into the end of the year. so we're getting a dramatic concession this month over month for some of these rates. and we'll get a look at how it's going today with the five-year note option. so i think it's fallen a little dramatically when that 400,000 started circulating last night. the market really fell out on -- there is no bid. so it's recovered somewhat. so i think that although it's been a rough week since the fed meeting for bonds, the concession is fairly significant now and we should see a decent bid come back. >> is it still the situation, though, that you can't fight the fed, that they are the biggest player at the table, no way around it? >> well, certainly in the medium term. they're going to keep coming in, you know? but i think it's more about process as the other guest was talking about.

if the fed is going to take care of this and people to go play elsewhere. and i think that's a much more bigger theme for people outside of the front lines like us who, you know, traders that are trying to maneuver large amounts for shorter periods of time. >> hey, jim, can you kind of focus in within the high yield market? are there certain areas that look a lot better than others? >> yeah. i think it is very similar to some of the things that you're seeing in the equity market where you see positive growth. away from the macro story there are some really good stories going on. the housing recovery and all the derivatives that kerr with housing. you think about what that means for trucking sales or what that means for some of the component parts of housing, roofing and lumber. those things that we see some positive growth. the technology space. as we go into next year, i think there will be a recovery in some of the tech spend. and certainly in some areas where you think about ipad and the new smartphones, you think about the infrastructure behind that. so those are things where we're

seeing real idiosyncratic recovery in those names where we see high growth in the market, as well. >> when you start thinking about things like the ipad and areas around that, we've heard about the recovery for some time. that hasn't played out in the bond market yet? >> well, in the high yield market, it has. if you think about where equities are trading in and around housing, right, in the housing valuations are now trading more times -- two times book value, you're seeing the same thing as you have the growth in their equity value, they're derisking. and so the credit risk premium res coming down, which is leading to higher returns in the high yield market. so we are seeing still that. that's very different than when you have a healthier economy and that the u.s. treasury curve will steepen which is going to be more of of a negative for other durations. high yields and loan res still tied to much shorter deration

assets and are improving with the equity market. >> kevin, very quickly, what's the most important thing you're watching right now? >> two things i would say real quick. the first is the flood of cash when they killed the tag last week. you're going to talk about 300 billion in cash flowing into the very short end, so bills are at zero into january. and then the other end of the spectrum, which is past the plt, the curve is steepening dramatically. there's some positive consequence to that, so you have to catch that closely. >> kim, kevin, thank you very much. regarding the fiscal cliff, they're missing the other banking cliff if you like or the bond cliff that could come with tax. >> we'll talk more about this. gentlemen, thank you both. jillian will be with us for the rest of the hour. coming up, walmart responding to new allegations of bribery at its mexican

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welcome back, everyone. in our headlines this morning would be toyota will pay about $17.4 million in civil

penalties. toyota failed to report a safety defect. this is the fourth time in the last two years that toyota has been fined like this. toyota is paying the penalty without admitting or denying guilt. in a front page article in today's "new york times," walmart's mexico business offered bribes to get what the law there would otherwise allow. now michelle caruso cabrera joins us with today's headlines. >> they have a new story today, another doozy, extremely long, very, very detailed. the "new york times" outlines what they see as a pervasive pattern of bribes connected to 19 different stories. when you read the whole article, they do a deep dive into one specific store near the ancient pyramids in mexico. >> i'm glad glad we assigned you

to this story. >> this is a mile from the ancient pyramid necessary question. no doubt, the most controversial walmart in mexico because there were, at the time, allegations of bribery because people saw with what efficiency the store was getting built and they assumed that bribes had to have been done. something is happening. that's the kind of culture. walmart has come out with a statement saying among other things, we are committed to having a strong and global anti-corruption program everywhere we operate and taking appropriate action for any instance of noncompliance. then they go on to outline all the things that they have done including hiring 300 legal andthing experts. they've dedicated 79,000 hours to this, 85 in-country visits. they are conduct an internal investigation that resulted from the first "new york times" article that andrew mentioned. we had a chance to actually ask mike duke a question about that

investigation. he's the ceo of walmart. when he spoke at the council of foreign rlgz relations just la week, i asked him a question. here is how he responded. >> when can you see the results into the internal allegations of bribery? >> i'm sorry, i wouldn't be able to say. i don't know. i think these things are intended to be very, very thoughtful, deliberate, well done and very, very complete. >> so a couple of -- just now, observation bes the article. we traveled to seosaquan. we interviewed some of the people involved. i introduced emma and emma never brought up culture, she never brought up protecting the pyramids. what she was worried about was her small business losing money. you talk to officials there right now and they're like, oh, yeah, we wanted to welcome

walmart, but we asked them to build this new cemetery and could they help us with the school. this was very much tit for tat. the other thing i would say is when they talk about, oh, there is a concern about whether or not the local markets were going to be destroyed, i think a lot of people think, oh, local markets, very charming and quaint. but the fact is, if you will to a local market in a lot of latin american country webs they're felty, they're dirty, they're filled with flies. so the walmart there was welcome by a lot of people who felt it was clean. and the other thing to remember about walmart stores and any other box market stores, they call them [ speaking foreign language ]. self-service stores. these were brand new ten years ago. you could walk into the store, take an item off the shelf yourself, ten years ago, and still in many parts of mexico, they're shopping the way we shopped during the victorian era. >> when i go in and say --

[ speaking foreign language. [ -- >> you're asking for services? >> two beers. okay. it's different. >> can i just say -- [ speaking foreign language ]. >> that's right. i like what you said, though, that -- i mean, and i'm not going to make any comments, i'm not going to argue with you about anything, andrew. bribery is wrong. but knowing that, hey, there's something being done, there might be a bribe, it's just very -- >> telling about the culture. >> something is actually happening, there's progress being made here, there might be a bribe. otherwise, nothing is going to happen at all. take it with a grain of salt. >> that's because they rewrote the map. they found the illustrations of the map. >> there was a zoning map that was supposed to be written one way to prevent the construction of this particular walmart in a certain field. they managed to get to the

person before it was published in the newspaper and they rewrote the facility alleged in the paper. >> like i told you, buy the stock last time. >> you're up. >> i don't think this moves the stock today. do you? >> i don't believe so. >> the bid/ask is spread. >> by the way, the headline, the bribery aisle? >> they do a really good job of documenting. >> from the "new york times," you just hate walmart in general. i'm giving david barso the full surprise if i can. >> you gave the nobel to crudeman. coming up, we're going to ask the ceo of godiva on his take of luxury gifts. h

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given the fiscal cliff have you put things on pause, on hold? >> we haven't stopped investing

because we've been worried about it. we've been investing around the world. >> any compromise is going to involve some dose of austerity. >> the kind of deal you're reading about is like a grand bargain. that's what we'd all like to see happen. >> the presumption is we want the government to do things. when the government does things it usually doesn't end well. >> we are one decision away from restoring our fiscal and our moral authority around the world. let's just do it. >> you can feel it, really. what is today? tuesday? a week away. >> i love that. >> yeah, it's good. >> for the holiday tree or the christmas tree? >> i still call it a christmas tree. >> obviously -- >> i know, i know. most people are not -- >> enjoy the holiday. >> wait a second. you're jewish? >> i am. >> do you have a hanukkah bush? >> no but that's what my grandmother likes to call it because she doesn't like to call it christmas. she's always, many years, the whole thing --

>> a yule log? in >> excuse me? >> one godiva chocolatier, jim goldman the ceo is here and we know that it's christmas because jim comes around. how is business? >> good morning, good morning. >> good to see you. >> business is good, but the next several days are key. >> are they really? >> hence you're here. >> waits, waits, waits. get a big bump on black friday as we did and now is the time to go out there and stuff your stockings with godiva chocolates. >> i see all these ads today, 50% off if you come in the door for places like toys "r" us. do you offer discounts like this? >> everyone is doing a level of promotional activity. so we do some. so we have specials on our gold boxes if you want to buy two, there's special pricing. multiple chocolate bars like dark chocolate peppermint punch. you can buy multiples on that. the consumer is very savvy. they're looking for quality, value, we work really hard to deliver that. >> how much more does it cost

than last year? have prices gone up? >> prices have edged up everywhere. but we have very accessible price points. this is one of the favorites this year. $10 price point for godiva chocolate. this is my favorite. these are limited edition truffles. so like cranberry, like ginger bred, raspberry linzer tort, they're limited edition truffle. $15. >> sounds good, huh? >> the things, the 12 things, whatever it is. you know, went up the most. the geese a-laying. >> the geese a-laying? >> because of what it cost to feed the geese. you can get ladies dancing. you can get ladies dancing, no change in price, andrew. so the same -- same price as it was last year. >> out of all the ingredients, what went up the most? >> cocoa prices are edging up. bounces around a little bit.

i feel like i'm the most fortunate guy around, i'm selling chocolate at a time when there's a lot of stress and strain out there. and you know, cocoa edging up is kind of small -- >> how much chocolate do you eat a day? >> i -- the most fun i have is when i get together with our chef, and i get to taste the new stuff. and it's hard not to really have the whole every piece, eat the whole thing. it's fantastic. >> do you ever get sick of chocolate? >> never. you know, we have a belgian chocolate brand that just does amazing things. this gold, three dozen godiva chocolates and i get to taste those before a lot of people. >> you'll be back for valentine's day, i guess, probably, won't you? >> this is our biggest time of the year. >> it is? >> on the internet in particular. >> bigger than valentine's day. >> in totality. so today is a big day, by the way, on the internet. >> thank you. >> thanks very much. >> we'll hopefully eat our way through the commercial break. our thanks to our guest host

this hour, thank you. >> thank you. >> i'm sorry we didn't spend more time together. quick break now. morning's top stories when we return. >> plus, is a deal on the fiscal cliff within reach? former white house economic adviser larry lindsey will tell us if the latest offers are for real. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪ nespresso. what e?

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progress on averting the fiscal cliff. the latest details and what it means for your money. >> gun control and mental health care taking center stage among lawmakers in the wake of the newtown shootings. we speak to a connecticut congresswoman who is fighting to make mental health care more affordable.

>> and we're officially one week away from the big man's arrival. >> ho, ho, ho! >> yeah! it's me, buddy! >> find out which retailers should be on your naughty and nice lists as the second hour of "squawk box" begins right now. >> good morning, everybody, welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the futures are indicated a little higher. you can see right now, actually, dow futures up by 64 points. s&p futures up by more than 8 points as we get to hear more about the fiscal cliff. sounds like the two sides are getting closer together. they are rising above. that hope for a deal has been helping things this morning, not only here but in europe and asia. let's get to your other morning headlines. a "new york times" investigation says walmart's mexican unit

routinely used bribery to secure desirable locations in mexico. the article says walnext was an aggressive corruptive. walmart is looking into the investigations. also, night capital's board still hasn't decided which of two takeover offers it favors. the board is reportedly split on the competing bid from get-go and virtu. get-go's cash and stock offer is worth about $1.8 billion. hmm. >> clearwire, in the past, this will be sooner or later this deal will be done. >> it will. >> which one? >> i don't have any preference. do you? >> i don't. >> you have no preference whatsoever? >> what's better, all cash or stock and cash? >> cash. >> show me the money?

>> bird in the hand. >> a federal judge has turned down apple's request to ban certain samsung models from being sold in the united states. the models in question were recently found to have infringed on apple patents with samsung ordered to pay apple more than $1 billion. but the judge ruled that banning the phones was too broad of a punishment since only a small fraction of the features involved are covered by apple's patents. >> in other apple news "the wall street journal" reporting that apple is in early discussions to integrate local data from foursquare into its mapping application. apple has been talking to a number of companies that collect local data to improve its mapping application. map service has, of course, had a rocky reception and faces competition, well established companies like google, google maps, foursquare developed apps that help people find local businesses and tell their friends where they are, venues like bars and restaurants. >> and cerberus says it will immediately begin to try and sell its investment in gunmaker freedom group in light of last week's school shooting in connecticut. yesterday, calster said it was

reviewing its investment with the firm. they invested $751 million with cerberus at the end of march. cerberus acquired firearms maker bushmaster in 2006 and later merged it with other gun companies. i remember this. did a big piece on remington and -- >> and bushmasters, you may or may not know is the manufacturer of the ar-15 rifle used by the shooter in the newtown killings. >> just got a great column on this today. >> in "the new york times." >> the private equity guys that are out there. they would be the ones that would be making the calls on this. >> and now they won't be. it's very interesting how fast they move. this is literally between everybody else who is talking about this yesterday and but also they lived -- they've been through the gauntlet before. remember cerberus was chrysler. they owned chrysler. this is one of those times where

they're saying you know what? we're getting out of the way right now. >> it's amazing. i've never seen anything move this quickly. >> a big game hunter? >> i think he's a deer hunter is my understanding. his colleague is also a big hunter that belongs to hunting club upstate. signs of a fiscal cliff compromise helping boost market sentiment. new details coming out of a meeting between the president and house speaker john boehner. eamon javers has the latest for us. >> good morning, andrew. the movie that you're watching in washington is now a lot less like apocalyptico where we're doing a forced death march through the jungle and a lot more like when harry met salary where we kind of flirt for years and the two parties come together and do something special at the end. that seemed to be where we're headed, at least based on the president's offer last night, which is much closer than speaker john boehner's offer from last week. let me run you through the details of what the president

offered, starting with the issue of tax increases, what the president is asking for is $1.2 trillion now in revenue increases on individual income. that's down from his earlier request of $1.4 which is down still from $1.6, which is where he started. permanent extension of the provision for below $400,000. that means that those people making $400,000 and above would be hit by tax increases. $1.22 trillion in spending reductions, the president's offering, and fast track processes for corporate and individual tax reform, as well as spending reform, and there are a bunch of spending details in here. let's put those up on the screen now. you can take a look at exactly what the president is proposing in terms of the spending reductions. $800 billion plus $290 billion of interest, $130 billion of what they call cpi spending savings. the $290 billion of interest is going to be controversial among republicans. they don't think that interest savings should count towards this deal. $400 billion in health. $200 billion in discretionary

spending cuts. so a lot of spending cuts there. the white house says this is a good offer. we should not expect necessarily that this will be a final offer here. i spoke to this office of speaker boehner last night. they say that this offer, although it moves closer to where the speaker is, is still not even close to in balance, which is what they're hoping for in a deal here. so we're getting closer to a deal but we don't have one just yet, guys. >> take a lot of chances there with the harry met sally references. >> you think i pulled that off? it's a little early in the morning. >> kind of. when you mention it, most people go back to that one meg ryan scene in the diner. >> we're not there yet. >> yeah, exactly. >> i'll have what he's having. >> i'll have what he's having. >> but that's, you know, rise above, all the stuff we talk about, that would be a great -- that would be the happy ending that we're looking for in all of this. right? >> that's a good phrase to use.

>> you started it. >> to describe this consummation of this dealmaking process. >> oh, geez. >> do we all have a cigarette afterwards? anyway, for more -- once we do -- >> holy cow. >> for more on the fiscal cliff and the markets we're joined by larry lindsey, former national economic counsel director of the lindsay group and someone who is definitely ready to get down, jerry bernstein, former chief economic and policy adviser to vice president biden and senior fellow of the center on budget and policy priorities. and you got -- gentlemen, probably represent to some extent the two sides that we're dealing with here. but, so i'll ask each of you, gerald i'll ask you first, are you okay if we -- let's say we end up at 500 and go up 2% or 3% and then the president does make some concessions on spending? will your -- i was thinking -- >> 2% or 3% in terms of the tax rate? >> the 500,000 threshold? >> and go up 2% or 3%, and then the president gets a year for

the debt ceiling, and then will he be able to deliver those spending cuts, cost of living increase? >> i think that that does seem to be the direction where things are moving. and i think -- >> is he okay with that? >> i think both sides would be okay with that. i think the important thing here is that you've got $1.2 trillion in revenue on 9 table now and i wouldn't want to go below that. if you're going to go up to 500,000 you're going to have to find other ways to make sure you're not going too far below -- >> wait a minute. you do by only going up two or three percentage points instead of going back to 39.6%? the reports i read suggested that boehner was okay with -- >> in order to do that. if you're not going to get to 39.6 and you're going to try to raise at least a trillion, i don't think the president's going to come down below that then you have to find some base broadeners. by the way, in this deal the president presented last night as eamon was talking about, there's considerable base broadeners in there. there's only one rate increase. it's not taking the two rates, two top rates up, only taking

the highest rate up, and then he gets the rest 6 the revenue by capital gains and dividends going up to 20%, by the way, not to ordinary income, and by closing a bunch of loopholes by the 28% deduction that the president's been talking about. that kind of a deal. i'd rather have two years on the debt ceiling but one year, maybe we could live with that. >> larry, how many guys could boehner get to sign onto that? enough to go with the democrats to do it? >> well, jared and i were talking about this in the green room. what's surprising here is what the president campaigned on, tax increases over 250. it's total $970 billion. so we're now at $1.2 trillion, and we're moving closer to the center? i don't think so. we're moving further away from what he campaigned on. now, three days after the election, 970 to 1600, then 1600 to 1400. then from 1400 to 1200, then oh, my gosh the president's compromised. no from what he campaigned on, he's still moving the goalpost

away from a compromise. >> it sounds like he'll probably end up where he started. he'll probably end up where he started. >> oh, i think -- well, a trillion seems to be the right number. if you look to last year's negotiation, the deal fell through at 800, and then the president countered with 1200. then he campaigned on 970. so you know, started going to washington, a trillion -- >> larry -- >> he's learned to negotiate. >> people -- to move the goalposts outside of the ball park is what he learned to do. >> boehner's got guys that are way to the right of you, and then people with jared that are to the left of jared, the president's got to make it look good for these people or he's going to get pilloried on the huffington post. >> on the cpi chain, which the white house is making i think positive sounds about, there's a lot of people on the left who are not happy about this. >> i'm talking about -- >> i'm making a factual statement about where -- >> the aarp is sharply -- >> that's true.

>> you're not just talking about -- >> and by the way, just -- >> aarp is pretty hard left. >> if you do chain the cpi so social security benefits grow more slowly you get more tax revenue, as welt, because your tax brackets grow more slowly. so nominal income growth passes into higher tax brackets more quickly. so that's another part of this deal. >> but does it hurt the -- >> it hurts low income, old elderly, considerably, and that's why the white house is saying we'll take the changed cpi but we need a bump-up in their benefits. >> what does that look like? >> a measure that increases social security benefits for old, elderly people who have low income by some amount that's undisclosed. >> separate for veterans, too? >> yeah. >> i think -- >> tax brackets. you didn't look -- you don't want to help trail people? >> poor, old people. >> because that's -- >> of course. >> that's a position i take.

>> if you resist that's what -- >> this is the christmas season. you need to give another one time increase in benefits? >> a permanent -- >> you're going to bump up the benefits of low income people to offset the compounding of switching to the chained cpi for poor elderly. by the time you get to be 80, 85, 90 years old, that difference between the two price index represents a real serious benefit cut. >> you mean less of an increase in benefits? so the question begins, what -- >> -- promised benefits. >> what i believe in is we should have correct indexing for social security. and so, let's resolve the debate on what the right price index is. and get away from this cut increase stuff. >> but i do agree that we should shift to a more accurate price index. >> the one we had now was not accurate? >> the one we have now exaggerates the price increase. >> that's right. >> so what you're actually saying is we should continue

with the overindexation of social security -- >> no, no, i'm saying we should switch to the chain cp ooichlt for a more accurate price but we need to be mindful -- do you know what the median income of the social security beneficiary is? $23,000. >> i agree that we need changes in social security. but that's very different from what's being talked about here. i think, you know, the -- the motion behind all this is not the right way to deal with budget numbers. the way to deal with the budget number is to decide what the right rate of price increase is. because that's what people really need, and let's adopt it. now if you also want to say, well, yes, benefits are too low for some people, i'm for that, too. >> you've got to approach this with your brain like you're doing, and you've got a big one, and with your heart. and the issue here is that the median income for social security beneficiaries is $23,000 for the typical social security beneficiary, something

like 70% of their income comes from social security. >> but i thought i just heard agreement between you two on one -- a plan you could both live with, which larry just said is get the appropriate indexing, which you've also said. if you look at the people who are at the lowest end of the spectrum and you want to increase their benefits, then you would go -- >> that was in bowles-simpson, as well. that bumpup. >> right. which is the best -- separate issue. the other thing we should do, by the way, when we're changing the index is we have these things called bend points. i'm sorry the audience, we should -- >> a little early for bend points. >> well, but that's -- >> i meant in the morning. >> it's definitely early in the morning. but we should index the bend points, too. that would balance just doing that, just -- >> really? >> just doing bend point indexing would make social security solvent forever. >> would you agree -- >> that's not on the table right now. >> so my question for the president is, why isn't it? >> if you're going to go with

this, why don't you solve the problem. we take social security off the table. >> i don't think we're going to do social security reform in the next two weeks. i would say this, how about raising the taxable maximum income, which used to cover 90% of earnings, now covers 84%, because there's so much more earnings inequality. the tax max on social security doesn't reach as many earnings as it did before. >> i'm with fdr on this. i don't think we should turn social security into a welfare program. >> this is a greenspan idea, larry. keep it at 90. >> i'm with fdr on this. >> all right. thanks, larry. thanks jared. they'll be with us for the rest of the show. >> coming up next signs of fiscal cliff progress sparking a late-day rally with all key s&p sectors finishing in positive territory. but will the momentum continue this morning? we're going to talk markets next. then at 7:30 eastern, important conversation connecticut congresswoman is going to be pushing for access to quality mental health care in light of

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welcome back to "squawk box." we've got a takeover deal this morning and it's one people around this table are going to care about.

nielsen, the holding company well known for its tv ratings, buying arbitron. the deal is worth $48 a share in cash. that's a 26% premium over yesterday's close for arbitron. the two will hold a conference call in the next hour to talk more about that deal as it happens. but we do care about that. >> we do. i wonder some days whether, you know, with all the -- the question is, the set top boxmakers know everything and nielsen is such a blunt instrument, i don't understand the politics of why that still dictates. privacy. because they can't hand out the information. spying on your -- >> if you went to every customer, if comcast, whomever, time warner customers said we'll give you a $5 discount every month if we track what you're doing on a blind basis, i think

a lot of people would sign up for that. >> what if the set top boxmaker can see what you're doing? would that be okay with you? >> can see what i'm doing? >> actually watching you. >> watching people. know that you're a live body watching the >> oh, like an xbox style camera? >> can see everything you're doing in your living room? >> you're fine with that? >> you need to identify that there's actually someone on the other end. >> maybe there's not a whole lot going on in your living room. we understand. you got twins. there's nothing going on. >> the s&p 500 at a nearly two-month high on optimism over the fiscal cliff solution. our next guest is upbeat about the market prospects. joining us is ed gardeni. you were positive about this even before we got these movings that we saw last night suggesting that we're closer to a deal. >> so many folks have been focusing on the downside, been looking over the cliff and saying how horrible it could be. so i actually have been studying most of my time wondering what

the upside could be. but i thought we would avert the cliff. we're doing that right now. the upside is the u.s. economy could be surprisingly strong next year. i think we could have a second recovery led by housing and autos. and, if that's the case, i think the markets go higher. >> how much higher? >> well, i got three numbers of mine, 1465, 1565, and 1665, just to keep things simple here. 1465 being the cyclical high for the market, which we hit on september 14. i think we're about to take that out very shortly, and the prospect that there will be a deal. if the deal is actually announced, which i think it will be before the end of the year, i think we could take out the all-time record high, if not by the end of this year, probably next year, and that's 1565. and then 1665 is what i'd be using for the end of next year. >> for the end of next year? >> that's assuming weet get

growth of 2%, 2.5%? >> that's a reasonable assumption, he growth of 5% from 2013 and twour. the market looks ahead. as we get in 2013 will focus on 2014. i think we can do s&p 500 earnings in 2014, slap on a multiple of 14, which i think we could do. 13 has been sort of a jinx. every time we've gone to 13 the past three rallies, failed. so we're going to take it out and go up to 14. so i think -- >> wow. and you think 14 is even with interest rates eventually back back up we could do 14. >> as you know if interest rates back up, there will be a sign the economy is doing pretty well. >> that makes sense why we have such low multiples with zero interest rates, because it's all sort of a converse -- >> soar interest rates posit

that something is wrong. >> tepper was in the opposite, right? >> he'd say don't fight it is probably what he said. we appreciate your time today. >> always a pleasure. >> thanks for not insulting us while you were talking about things. that was nice, too. >> i never do that. >> i know that. appreciate that. in the wake of the tragedy in connecticut. gun control and mental health care taking center stage, now congresswoman rosa delauro has been fighting for better mental health care. she'll join us at the bottom of the hour. still to come, retailers that have been naughty, and nice. we break down the holiday season for specialty retailers, and tell you what it means for your portfolio. i always wait until the last minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.

if you have any comments or questions about anything we've been talking about on "squawk," e-mail us at "squawk" @cnbc.com. you can follow us on twitter as well, @squawkcnbc is our handle. up next the shooter in the newtown tragedy reportedly suffered from a mental disorder. we'll speak to one of the lawmakers holding the purse strings for federal mental health care funding. [ male announcer ] this december, remember --

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welcome back to "squawk box." in our headlines this morning

there are a handful of economic reports on the calendar for investors to start thinking about. in just about an hour from now we will get the third quarter current account deficit. it is expected to shrink somewhat from the second quarter levels. at 10:00 eastern time the sentiment survey from the national association of home builders. it is showing slight improvement from a month ago. toyota has been fined about $17.4 million by the department of transportation for allegedly failing to report a safety defect in a timely manner. this is the fourth time that toyota has been assess aid fine like this in the last two years. toyota does not admit or deny guilt in settling this claim. in other auto news the redesigned 2013 honda accord won top honors from consumer reports. that comes just a year after the magazine panned the company's redesign of the popular honda civic model. and cerberus says it will immediately begin selling its investment in gunmaker freedom group in light of last week's shooting in connecticut.

yesterday calsters said it is refewing that investment with that firm. they had invested $751.4 million with cerberus as of the end of march. cerberus acquired bush master in 2006 and merved it with other gun companies to create freedom grup. bush master is the manufacturer of the rifle that was used by the shooter in the newtown killings. this is an issue that's received a lot of attention. andrew has a column in today's "new york times" that points out how private equity would be calling the shots in this. >> and quick for them to turn around. i'm still very surprised by how quickly they've urn turned around on this issue. we are awaiting -- >> we're going to talk to congresswoman from connecticut, about one of the issues that has come to the fore, which is what will we do with mental health? that's an issue that we can talk about, and have a couple of shows on that. larry, you're -- you're a

conservative thinking in certain respects, but, very even keeled about things. you've seen a lot of politicians with "a" ratings from the nra because this was -- this was different than -- i mean, i hesitate to stay different than some of the other things that we've seen. but, these are kids in first grade and second grade, and you've seen a lot of people say, everything i've ever thought, i'm rethinking now. and everything is on the table. how do you think about that? i mean what we want to do is protect our kids, no matter what. i'm thinking gun-free zones, i don't know. armed guards. why can't there be one armed guard at the entrance to schools? is that the wrong way to approach it? it seems like criminals can always get guns. mentally ill people can get a gun. >> you know, as a father of three this is really an unthinkable tragedy. you just -- my heart goes out to those parents.

it's just awful. it's an awful thing. >> it's affecting everything, you can't stop -- i can't stop thinking about it. >> it's -- you know, what i think there are a few things interesting about it. and how much coverage it's getting. you know, every -- almost every day in inner city neighborhoods, a child gets shot. and it doesn't make the news. that's in every one of those neighborhoods. we never talk about it. i think this is bringing it to our attention because it's neighborhoods like we live in, right? and that bothers me that suddenly society becomes gripped when you have a much bigger ongoing tragedy. i think that says something about our mentality. and you know, i actually think that's why we have a constitution. because, it's when you have

tragedies, and when emotion is running high, that you actually need a break to step back from the emotion and think about what's going on. >> wait a second. some of the things that have been proposed have been simply bringing back a ban on assault rifles that was brought here in 1994. >> which the justice department studied and found it was ineffective. you know, sure if we want to do it, that's fine. it passed the constitutional test. but, i don't think that is going to solve our problem. >> it may not solve the problem. it may not have stopped this situation. but it would certainly have some impact. >> again the justice department studied this in the late 1990s, and found that the ban didn't work. >> here's a question, of the top 23 richest countries in the world, 80% of gun related deaths happen in this country. all right, 87% of kids in the world who get killed by guns in the 23 riches country, happens here.

that can't be the right outcome. >> we have a broader ownership of guns than anywhere else which is the basis of the statistic. so you can say, well, why is that the case? i would simply suggest that there are a lot of other issues that are related to -- we probably have the most swimming pool drownings in the world, too, in this country, because we have the most swimming pools. i mean, we have 700 kids a year die in swimming pools. >> but maybe people are okay having pools but they're probably less okay having guns. >> but -- i would not own a gun. for various reasons. i don't like the safety. i think the fact is we all have to respect the rights that other people have. and i am forring so that would be -- pass a cost-benefit test. we're going to be talking to a congresswoman. the fair question to ask her is, are you willing to ease the privacy laws that prevent mental health professionals from

reporting people to police? >> some of the countries you're talking about ban the ownership of guns. >> some do. >> right. >> absolutely. >> that's unreasonable to you with the second amendment where it is? >> i don't know if i could -- >> even the most -- even the most -- i think even people that have totally changed their view, no one is saying anything about -- >> banning them entirely. >> but you are fully ready to do that, which i can see, which is -- that's just not the way -- larry said, that's why we have a constitution. >> i think this horrible tragedy put a lot of this in focus. i think people who were on another side of this debate two or three days ago are starting to switch sides. >> no one is talking about banning the ownership of -- >> of handguns. >> let's continue this conversation with the congresswoman. before i do that. let me read a blog post which is getting a lot of attention, titled, i am adam lanza's mother, and it was written by a boise idaho resident and gaining a lot of national attention.

it goes into some of the very painful details of raising her 13-year-old son with mental illness and the strug ams she is having getting him the proper care. she shared a recent incident she experienced when she writes the following. i love my son, but he terrifies me. michael pulled a knife and threatened to kill me and then himself after i asked him to return his overdue library books. his 7 and 9-year-old siblings knew the safety plan. they ran to the car, and locked the doors, before i even asked them to. i managed to get the knife from michael, and methodically collected all the sharp objects in the house into a single tupperware container that now travels with me. throughout it all he continued to scream insults at me, and threatening to kill or hurt me. this is just one story of many, and many people struggling to find the right care and needs for people who are mentally ill. now joining us to talk to us all about this, congresswoman rosa delauro who is the ranking member of the appropriations, labor, health and human services

subcommittee which has jurisdiction over funding federal mental health care and grants to states, and congresswoman, thank you for joining us today. >> thank you very, very much. so good to be with you. >> we've been having this debate around the table. we've been having this debate around the country. are we not spending enough money on mental health? >> we are not spending enough money on mental health. i, too, read that article that you just quoted, and it was very -- it's poignant. someone seeking help. i think it was an in other news show yesterday where someone indicated that, where you can, you know, purchase a military-type weapon. and i think that's what we're talking about in this instance. a much more quickly than you can access mental health services. and we need to confront this issue, and make this a part of the national dialogue as we are addressing this serious issue of violence. for me, this is a -- my response

to what happened, in addition to how overwhelming it is, to see the slaughter of innocents, which is what happened in newtown last friday. but it is about military-type weapons and a ban on assault weapons, the high-capacity magazines, it is about background checks. but it is about mental illness. as well. the focus, that needs to be on parity in the discussion today. you know, there's so much talk about arming our schools, turning them into fortresses, i would like to -- i believe in the safety of our schools, the physical structure of the school. but in addition to it, why aren't we talking about putting trained mental health professionals in each one of our schools? as part of the nurse's office

where someone who is well trained who can recognize a symptoms or can, having conversations with youngsters on a regular basis, being able to engage with parents on what is going on in the minds and lives of their children. >> congresswoman, my gut instinct is the same as yours, this idea of the assault weapons ban, seems to me like common sense. but our guest host larry lindsey is laying out there was a study from the department of justice -- or from the department of justice? >> i think it was justice, yeah. >> what did it find? >> that the ban was ineffective. it had to do with definitions of what the weapon was. but, by the way, i am very sympathetic to what the congresswoman is saying. but if we're going to link the two, then don't we also have to say, will those mental health professionals be able to report the people that are troubled to the police? i am all for banning -- in fact we now have a ban that if you have a mental health history or a criminal history, you can't

get a gun. okay. i think that's a great idea. >> but we may have that history, larry, but the fact of the matter is, is that people are getting around that. and i don't know about the department of justice study that you are talking about. clearly, one of the ways in which people could get around the ban was with regard to the definition of what constitutes an assault weapon. but that needs to be debated and discussed and we are talking about military-type weapons. >> but can we agree that if someone is one of the mental health professionals finds someone has a problem that they can actually report that problem to the police? that would seem to be an important step here. >> let's step back for a second in terms of, if we find that a youngster has difficulty, the issue is how to prevent that. what kind of treatment should that youngster be getting? you seem to move in the direction of calling the police. we have very trained, very

professional -- look, i'm from new haven, connecticut. i have a wonderful asset in my community called the yale child study center. and i was there yesterday, with dr. steven marin and dr. volkner and we were talking about how, in fact, we need to use these facilities that we have that have trained personnel. what kind of treatment would a youngster need in order to be able to address the mental health problem that he or she may have? how do you help the woman who writes this story about pointing her in the direction of where she can get help? the answer isn't whether or not you take this to the police department. whether you stigmatize someone with mental health illness. >> but should a young man in idaho ever be able to buy a gun? well that was part of what we were doing in terms of the vetting process. >> that's right. but are we going to be able to

vet -- >> we're supposed to be looking at background checks. and the effectiveness i would imagine of that system where there are a lot of loopholes. and look i see it every day. the way we want to skirt around some of the efforts that we have. >> congresswoman, how can you do a background check if the mental health professional can't report the person? it never shows up in the background check. >> it's when you go to buy and purcha purchase -- first of all -- >> so i go and purchase a gun -- >> if a youngster is going in, i'm talking about children, at the moment >> a kid can't buy a gun. we agree. so this young man grop to be 23 years old, with this history -- >> no, he was 20 years old. not 23. >> well, i'm -- >> and, in fact, he took the guns that his mother had that were registered. let us get the facts correct. >> we know -- >> ma'am -- >> he's talking about if someone -- >> hypothetical.

>> just listen. >> the person in idaho, that story, should that young man who is now 9, when he is 23, ever be able to buy a gun? i would say no but the only way we're going to be able to have the background check work is if, in fact, the mental health professional can report this incident to the data base that has those things. >> the background check doesn't work. >> the background check -- >> right. but i understand what you're saying. and i think there is a way in which we can, and we need to be talking to the professionals in this area, about how one does protect an individual's privacy at the same time be able to address the problem of mental health. and if you -- what is the incident of a youngster? what is symptomatic about a youngster, where they can get the kinds of treatment that is

necessary to address the problem that they have? >> so you have two rights that we're comparing. you're for taking away second amendment rights. >> no, no, i'm not. >> i can understand part of that. >> i am not. i am not. >> but don't we have to balance that against the privacy rights of mentally ill people being able to get guns? >> i am not talking about -- >> that seems to me to be a 67 more directly related problem here. >> it is. but i am. please do not put words in my mouth. i am not trying to bridge people's second amendment rights. i am saying that the military-type weapons, the type of weapon that was used in sandy hook, last friday, in my view, should be banned. that is not a -- i don't believe that that abridges someone's second amendment rights. the high capacity magazines do not abridge people's constitutional rights. and i think you're seeing more

and more people on all sides of this issue come to the table and say, let's reason together, and look at how we avoid the situation in the future. >> congresswoman we're going to have to leave it there. this is a conversation that, of course, is going to continue. we thank you for joining us this morning. >> up next, former omb director david stockman ready to rise above and tell us why he thinks the fed is at the heart of the problem when it comes to solving our nation's budget woes. "squawk box" will be right back. time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.

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the fiscal cliff countdown continues. could we be closer to a deal? joining us now, david stockman, was omb director under president reagan. what do you mean it's the fed? >> it's the fed because the fed has driven interest rates so low that money is free. you can borrow up to five years right now for 70 basis points, three years for 30. the congress is in no hurry to do anything. we're now in month 44 of the recovery, ten years ago no one would have said you needed a 7% of gdp deficit to keep the economy going. so i think what's going on is a farce. they should go home. they should let all these tax cuts expire. we couldn't afford them in 2001. we shouldn't have expanded them in 2010.

and we can't afford them going forward for the long haul. let it happen. nobody has to vote on it, they can blame each other. defense. let the sequester happen. the defense budget is stupid big at $700 billion in a world where we don't have any enemies left. so, instead of fooling around on the margins, pretending they're going to cut $800 billion, which is really a trivial number when you realize over ten years spending baseline is $48 trillion. >> you are not rising above at all. >> i am opposed to rising above. i think we should go over the cliff. i think we should take our broccoli, i think we should start paying our bills and not pretend that we can use this keynesian snake oil to keep medicating the economy. and if you really hate your children, then support this policy, because you're burying them in debt. >> don't you think that the fed has -- yesterday we had someone make a very compelling case that, you know, the fed, everything that it's done has been at least marginally effective in letting us sort of

heal from the financial crisis. letting us get, slowly, not in one pulse, get rid of all the debt, letting us sort of rebuild savings, and now even, you know, it's 8% unemployment or 7.7%, whatever it is. we continue to do this, inflation is not bad. we get it down to a better level, people's lives aren't as difficult. is it really that bad what the fed is doing? we haven't had to -- the negative effects have not been felt yet. >> that's what they said in 2006 and 2007 when we had the 1% interest rates. there was no housing, you know, boom. this is just a healthy economy -- >> where do you think it is now? >> we're going to end up with the fed having a trst 4 trillion or $5 trillion balance sheet. they can't keep it up. if that was true let's all stop working, have the fed print $10 trillion a year of money, drop it out of helicopters and live

happily ever after. they're painting themselves into a corner and i don't know when it's going to blow up but it's going to blow up. >> are you sure? this sounds like -- are you sure we're going to have five foot tidal waves hit manhattan, too? i hear a lot -- december 21st we're going to be okay, right? >> yeah, december 21st is going to be okay. but you ought to ask yourself if zero interest rates for six years, which means a six-year money earns nothing, before tax -- >> but is your point that congress is able to just not do anything because of the fed? >> the fed is the enabler. the cause of the deficit is bernanke and his merry money printers. >> did you call him bernanke, too? did you leave out the second "n." >> david, you want a pin while you're here? >> yeah. so -- >> i'm going to turn in my pin. the thing is, our political system is broken. if you actually look at what republicans want to do you'll get 17% of gdp in revenue. democrats want to defend

everything. put that out over ten years, and it's $16 trillion of new deficits. now, that is going to sooner or later, you can't print that much money. >> you can't. it's just worth ten cents instead of a dollar. >> i don't know if it will be an inflationary blow off or just a collapse in the bond market. but they're inviting a bad time. >> thank you. >> we're going to sell some advertising with the sharply devalued dollars right now. we've got to sell more. >> thank you. >> come back and join us again soon. when we come back the futures pointing to a higher open on hopes of a fiscal cliff deal. we have republican senator bob corker right after this quick commercial break. at optionsxpress we're all about options trading.

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[ male announcer ] just like you, business pro. just like you. go national. go like a pro. moving closer to a deal to avoid the fiscal cliff. >> i can't stop! >> there's a cliff! >> but can president obama and speaker boehner get their parties to come together on a compromise deal? >> we don't take no prisoners. >> we don't take no for an answer. >> oh, yeah. we don't take no for an answer. >> we don't take no for an answer. >> we'll ask senators from both sides of the aisle. republican bob corker and democrat kent conrad. >> plus the sector names that will make you money in the new

year. our what's working serious continues with artisan portfolio manager james keeper. the third hour of "squawk box" starts right now. >> welcome back to "squawk box." i'm joe kerner along with becky quick and andrew ross sorkin. our guest, larry lindsey, former national economic council director and republican senator bob corker, will join us in just a few minutes to talk about the latest in the fiscal cliff negotiations. but first, andrew has your mornings headlines. >> a "new york times" investigation this morning saying that walmart's mexican unit routinely used bribery to secure desirable locations in mexico. the front page article says that

walmex was, quote, an aggress ever and creative corrupter. walmart says it's looking into the story and claims it's part of a broader investigation into foreign practices that was gun more than a year ago. and cerberus is saying it will immediately begin selling its investment in gunmaker freedom group in light of last week's school shootings in connecticut. yesterday, calster said it was reviewing its investment with the private equity firm. calsters has invested $71.4 million with cerberus as of the end of the year -- as of the end of march. cerberus acquired firearms maker bushmaster in 2006, later merged it with other gun companies to create freedom group. bushmaster is the manufacturing of the rifle used by the shooter in the newtown killings. samsung plans to withdraw injunction requests against apple in five eu countries. the company says it's dropping legal cases in germany, the netherlands, italy, france and the uk. this comes one day after a federal judge denied a request by apple to ban u.s. sales of samsung smart phone models.

the devices in questions are the ones that a jury back in august say illegally used apple technology. at that time apple had been awarded $1.1 billion in damages. the markets, dow looks like it will open up about $68 points higher. s&p up about 10 points, the nasdaq up 22.5 points coming on some of this news that we may be getting closer on the fiscal cliff. let's check out what's going on in asia. hang seng was down off marginally. shanghai composite up marginally and the nikkei up as well. quickly in europe, you can take a look at what's going on there. the ftse up about 0.38%. cac flat, and the german dax up about 0.5. >> the white house is proposing a new deal to avoid the fiscal cliff. let's get to steve liesman with more of the details. >> you're surprised, aren't you? >> isn't it happening.

>> soon as they want it done they can do it. >> you said it this morning. it's a fictitious thing. we're going to show you the movement in just a second, which is kind of interesting. the outlines of the deal to avoid the cliff appear to be taking ship with the president last night moving for the first time off the threshold of who will pay higher taxes. here are the details as we understand them. tax hikes on those making $400,000 and above. remember that was $250,000. immutebly. i guess it's mutable now. is that the opposite of immutable? dividend taxed to 20%. that's an important number. i couldn't get geithner to tell me what that number was. now they're at 20%, not 49 or 43. estate tax to 2009 levels. total is $1.2 trillion. that's down from $1.6 trillion. >> what is the 2009 level for the estate tax? >> it's all different. >> it's 35. >> 35? >> they reached a compromise. they don't do that, it goes to 55, and the pressure goes down to a million, and there's a lot of folks out there who would really be affected.

>> small businesses. >> let me show you the spending plan now, which is $130 billion going to the chain cpi. that's different from the existing cpi general agreement. the current cpi over states cost of living, they'll go to a different index. i've got to figure out what that actual index is. whatever. health savings. you know what it is, larry? what is it? >> yeah. it's a chain index where you change the market value. >> but is it connected to gdp? >> no it's a cpi collected data. >> right. >> but it's like the cpe, they change the market basket every year. >> okay. >> that's why it could change. >> all right. >> i believe health savings. >> i think air -- >> health savings, that could be something like, you know, means testing for medicare. could be. nonhealth savings equally split, we don't know that's correct, larry. additional discretionary cuts. interest savings, anyway, there's the total $1.2 trillion

on the spending side. the two sides are getting closer. but a spokesman for speaker boehner told eamon javers it is not even closed to the balanced proposal. i want to show you a look at where we've come from and where we're going shows the progress. here are the numbers. we've got that nice chart ready. we had been at -- obama had been $1.6 trillion on revenue when boehner was on zero. he went to $800 billion that's boehner. now his number is just under $1 trillion. i have a call in to the speaker to confirm that. $800 billion gap is now $200 billion. the president also asking congress for a two-year debt ceiling deal instead of his original request for an infinite debt ceiling. i want to just give you one point of fact here that i don't think is mentioned very much. even though obama says he's aiming for or we need $4 trillion. the congressional budget office

estimates we need only $3 trillion to get to the baseline to put the deficit on a sustainable path. there's a little bit of fudge in that. what we want to do, this is a thing that matters. all the stuff back and forth get to a point where the growth of the deficit equals the growth of gdp. that's what we're in for. >> stick around because we're going to continue this conversation right now. we are joined by republican senator bob corker. he's a member of the banking committee. and senator corker, we've been talking with you just a week ago you told us that you would have to see some serious budget cuts and some serious issues to address entitlements before you would agree on any deal. >> yeah. >> does this proposal from the president do it? >> no. i'm really surprised, at the reporting today. unless something happened this morning at 6:00, we're not close to a deal. and i've been trying for three weeks. i've been standing on my head, doing cart wheels to try to pivot towards entitlement reform. this is not a deal here. this is -- i think the house is

going to move today to rescue the bulk of our country from a tax increase, and unfortunately, that's all that's going to happen this year. because, think about this. i mean, there's -- if my understanding, only $400 billion in real cuts that are offered, only $200 billion of those are in entitlements. the rest of it is to be determined down the road. giving up the debt ceiling. giving up the $1.2 trillion in sequester. so, again, everybody seems to be focused on the revenue issue. it's like we're dancing on the head of a pin as it relates to that. but there's been no focus on entitlement reform. and until we have entitlement reforms we're not going to save our country. we need a $4.5 trillion, cumulative deal at a minimum that has at least a trillion dollars in entitlement reforms or basically what we're doing is going back wrtds. so i'm surprised at the reporting today. again, unless something happened at 6:00 a.m. this morning, i

think the house is moving to rescuing the most of the country from tax increases, and unfortunately, this will be taken up next year, something that's terrible for our country. i think all of us know, if we could get a big deal, and that's what boehner wants, and that's what kantor wants, and i've got to tell you, i think they have done an outstanding job of trying to get where we need to go, but when you have these nebulous offers of cuts, giving up debt ceiling, giving up sequester, it's really taking us backwards in many ways. so i don't think we're anywhere near where the reporting is today and i'm very disappointed. because i want to get this in the rear view mirror and start this year with economic growth. >> senator, let's go through these numbers. we look at the numbers and we assume that it's getting closer. but your point is because these are unclear numbers or the areas where you see the cuts coming from are not the areas where they need to come from, that is enough for this to be a deal breaker. >> they're not even determined. they're creating another fiscal cliff in a year to deal with

this fiscal cliff. what i've been saying all this year is we know what decisions need to be made on entitlement. every one of them has been scored. there's legislative language. we actually wrote the legislative language. and all we need to do now is make decisions. what we don't need to do is create another fiscal cliff in a year to deal with issues that we know how to deal with now. so, i don't think things are where you're saying they are at all. >> senator -- >> i just don't. >> senator, so last week, ron johnson and you and others said what we need to do, the house passes 98% and below, allows the top 2% to go up to 39.6. just what the president wants. and then we start talk pg about spending and entitlement cuts in light of the debt ceiling coming in in february? is that what you're talking about now? so we're going to -- >> we're going to have to see whether the rank and file that boehner tries to get, if they don't go along -- you're saying

they should mutiny and not do this deal he wants to do now and do this other one that puts the onus back on the president next year to come to the table for entitlement cuts. is that what you're saying? >> i don't even think speaker boehner unless, again, something's happened early this morning, he's not even going to try to sell this deal because he knows that the offer that they've made is not real yet. in other words, again let me say the cuts are to be determined down the road, with another fiscal cliff, that's being created. so what i would hope, joe, is right now, we would go ahead and implement the entitlement reforms that need to happen. and we've been trying to pivot to this for three weeks. >> i'm confused. you're complaining about the reports, which ostensibly means my reporting, so i just need to -- >> i'm not criticizing your reporting -- >> he's talking about how we are classifying this as being closer to a deal. he's saying -- >> that's the thing i'm a little confused about >> maybe they're not. the numbers may be closer --

>> just numerically closer to -- >> but numerically closer may not be the right -- >> why is there not numerically closer are they not closer? >> because they're not talking about spending cuts in the same areas. >> hold on, it's a negotiation. that's what we figured out. >> but senator corker tell us, is this a situation where we've been looking at this thinking this is rhetoric on both sides, that there is movement on a deal that's coming closer together? >> i think there has been movement. and i think speaker boehner candidly has been heroic in his efforts to try to keep our country from going through this again next year. i agree with all of y'all you'd like to solve it now. for three weeks i've been trying to get us all to pivot to entitlement reforms. we're just now beginning to talk about entitlement reforms. >> nor just explain what, so everyone who's watching understands. >> okay. >> about a minute and a half ago, the take away was that we're no closer than we were a week ago. >> we're closer -- >> just so we understand

exactly. are we going to have a deal by the end of this week? >> no. >> we're not? >> i think the house will move, this is my guess, unless there's a huge change that's occurred this morning, i think the house will move to rescue the bulk of the country from a tax increase. it's possible that if something hugely dramatic occurs very different than what's happened already, maybe something happens by year, but i think it's unfortunate that, again, we haven't gotten down into the crux of real entitlement reforms that both republicans and democrats know has to happen. we haven't done that. and so let me just say what the speaker would be trying to sell this morning. okay, guys, i'm going to sell a trillion dollars in reductions. we can identify $400 billion but we're going to kick the can down the road on the 600. we're going to create another fiscal cliff in a year. and in the process, i'm going to give up $1.2 trillion in sequester. and i'm going to give up the debt ceiling.

but, so if you look at the numbers, you're actually going backwards. okay? as it relates to the amount of savings. >> i really have a hard time understanding how you're saying that senator. the president just went from 250 to 400, he threw in something -- >> i am talking about -- >> -- he's been opposed to -- >> two facts out of your equation. first of all the little bar graph. you didn't have what the president wants for the entire campaign season which was 970. the cost of raising or eliminating the bush tax cuts on people making over 250,000. >> and boehner is the hero. how is that helpful? >> what you left out -- excuse me, steve, may i finish the sentence? you went -- the president went from 970 before the election to 1600 after the election. now you're reporting not from the 970 to 1600. the second fact that was left out of the presentation was that to get to the revenue numbers there's a tax line that was neglected which is the 28% rate

on itemized deductions which affects charity, which affects state and local taxes, and the value of the -- >> but i think it's fair to say that there has been movement. what everybody is saying around the table and what senator corker has said, there has been movement. we are not at some standoff. we are no longer talking necessarily but maybe we're mischaracterizing in saying we are no longer talking about ideological points. >> let me just say to becky, who seems to always be the most sane one, my respects to all of you, but i think -- i think the fact that we've moved away from the idealism is correct. ideology. and i think that is a healthy place for us to be in solving this problem. unfortunately, we've waited until december the 17th to begin talking seriously about entitlement reform. >> but senator, the thing that -- and i'm reasonable, too. the thing that i'm seeing is that we're still -- we're still talking about boehner, maybe we go to 500. he's at a million now.

you're talking about the house actually saying go all the way to 39.6 on the top 2%. you're saying give them that. completely. don't -- >> well, i'm not -- >> you're saying that's what they're going to do and then go back and really argue next year with the debt ceiling coming up about entitlements. that is throwing down. i mean that's -- >> how is that any different, joe? >> because -- >> let me just -- >> -- for next year. >> let me propose a solution. >> that's a long way from compromise. that's even more ideological to do it that way by giving up the fight on the 98% and then saying we're really going to take it to you with entitlements next year. >> well here's what i would hope would happen. i know it's not. but i wish the house would just pass a debt ceiling increase today of $1 trillion, accompanied with $1 trillion in entitlement reforms. i've written a bill that does just that. offered it on the floor last week. and so, joe, before the end of the year, you could have that settled but you'd actually have your $1 trillion in entitlement

reforms. put in place. >> we were argue youing about $400,000. $500,000. you want to end it on just go off on the top 2%? >> no, no, no. i think we will be at four, five, six, seven hundred, maybe $1 million. i think the house will do something in that area. >> oh, the house is -- the house bill won't be just back to the clinton level? >> no. i do not think so. >> oh. >> thank you. >> senator corker, thank you for, gives you a lot to think about and adding to the conversation this morning. we always appreciate it. by the way, while you were talking the market gave back about 20 points in the dow futures. we'll see what happens. >> okay. >> when we come back we're going to hear from the other side of the aisle, democratic senator kent conrad on the latest white house debt proposal. [ male announcer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money.

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welcome back to "squawk box." we are just a week away from christmas and the holiday shopping frenzy is on. what are retailers thinking is hot this season? joining us now to share the research, tom landro the senior retail analyst for susquehanna

retail group. what is the hot idea of the season? >> well, outside of obviously consumer electronics, which we all know about the iphones and so forth and tablets. i think within specialty apparel, sparkle, glam and glitter in sweaters. >> sparkles in sweaters? do you have any of those becky? >> yeah, i know exactly what he's talking about. they're everywhere. >> if we go off the fiscal cliff women are going to go out in style because they're wearing jeggings and leggings with colors and pat ernst. there's even a resurgence of meggings which is the male jeggings. >> would joe look okay? >> i was going to ask you whether they make sparkles for men? >> that may be a whole other -- >> jean leggings. >> oh, jean leggings. >> the lenny kravitz look. sort of a hot rocker. >> are they stretchy? >> they are stretchy. >> so skinny jeans that are -- i have some jeans but they're not

stretchy. they need to be stretchy. >> we all know how that feels. >> judging from the industry, black friday business was very, very strong. we've seen this polarization around those big events. so this week we expect to see a big surge in business as well. there's been a pronounced low after the black friday selling, the season overall has structured to be good. you know, most single digits call it. the narrow sector our favorite stocks right now are abercrombie & fitch. we upgraded the stock in july. it's up 40%. remains a top pick of ours. we think there are some merchandising issues going on over there as far as increasing the flow of newness. they've cut inventories dramatically. we think they're a very relevant brand and this is an opportunity to so productivity increase. that's a stock we like into next year. >> what do you think? look, i think they're ceding market share. this promotional campaign they have in place. you can list 100 reasons why it doesn't work, doesn't make sense.

it's not instant. you've got pins you can't put in your pocket, you can't give them to your kids. you've got to go home to a computer to look at a very tiny number to figure out if you won something. people want instant gratification. >> you talk about abercrombie & fitch. you called gap before it turned. is there something that we haven't seen that's made some of those improvements that you think could be the next thing that's going to turn around? >> i think abercrombie continues to be one of these places. >> the stock is up sharply. >> i think hot topics is an interesting story. you've got a nice little kiss with 3.2% yield in this name. and this frances cue story which is a high growth story. controversial, a lot of things going on there. but that's another one to focus on. >> tom, thank you for that. >> a little kiss. >> a little kiss. happy holidays. >> to you, as well. >> i saw demi moore just throwing herself at -- anyway, coming up, pictures -- coming up, president obama with a new

proposal to avoid the fiscal cliff. but are we really closer? we're going to ask democratic senator kent conrad in a few minutes. ♪ ♪ [ male announcer ] they are a glowing example of what it means to be the best. and at this special time of year, they shine even brighter. come to the winter event and get the mercedes-benz you've always wished for, now for an exceptional price. [ santa ] ho, ho, ho, ho! [ male announcer ] lease a 2013 glk350 for $399 a month at your local mercedes-benz dealer. at your local ...so as you can see, geico's customer satisfaction is at 97%.

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welcome back to "squawk box," everyone. let's take a look at one of the morning's big movers.

arbitron is being bought by nielsen holdings for $48 a share in cash about $1.3 billion. that is a 26% premium over yesterday's close. arbitron is best known for radio ratings while nielsen, of course, has made its name with rating television viewership. when we return, breaking economic numbers. we are just a few minutes away from current account data for the third quarter. that plus senator kent conrad. "squawk box" will be right back. [ penélope ] i found the best cafe in the world.

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all right. welcome back to wk skwk. we're going to talk to democratic senator kent conrad in just a minute. first some breaking news. we are seconds away from third quarter current account data. can you believe it's time for that again, rick? in exactly five seconds rick is standing by at the cme. you ready, rick? >> oh, absolutely. three, two, one, buzzer. 107.5 billion on the third quarter current account balance. which, of course, is a deficit. the last time we were at a number so low, only 107.5 billion. let me see, looks around third

quarter of '09. third quarter of '09. so indeed that is a bit of a reversal at least from a chronological standpoint. you know what i find fascinating real quickly, a two-year note yield of 26 basis points. i know that doesn't sound like a lot but we've been pretty much nailed to the wall at 24 basis points. so it goes to show you that there is a little bit of maybe agita going into the end of the year, profit taking under the guise of a hawkish fed under the guise that they may actually use a door for an exit. i don't think the last two guises, well they're more disguises. we want to continue to monitor the year-end events. whether it's apple or treasuries if it was performing in 2012 it is most likely in the checkout line. back to you. >> laughing at becky yesterday. the ten year from 1.65 to 1.75. you just went from 24 basis

points to 26 basis points. that got your attention. that's unbelievable. >> the world we live in. >> it is unbelievable. i guess the short maturities, even a -- see that's why you can't use percentages. i only want to talk to the calm one, becky. isn't that what mr. corker said. i want to know if he's really a republican. >> wait a second -- he said no deal here, rick. and this is a bad deal and you're questioning whether he's a republican? >> it's a horrible deal. it's a terrible deal. >> that's what he said. >> no, that's not what he said. >> i walked away thinking that he said, you know what's going to happen. we're going to end up passing something and doing all the details later. which is exactly why both sides play this little game. >> we were just talking off camera, i think there's -- >> rick, he's with ron johnson, who's one of you, he's a tea party guy who wants to go ahead, and have the house pass an

extension of the bush tax cuts just for the 98% and then go over the cliff in january, and then use the debt ceiling to extract entitlement and spending. >> i have a better idea. they've already done their compromise. they rose above. you know, playing this little game. millionaire tax cuts really 250. go to a million. let's go to 400. year not going to rename it 400,000 millionaire and billionaire and thousandaiare. they should say no deal unless it's three to one. spending versus revenue. that's the ticket. otherwise, let's take a walk on the wild side! >> all right we have kent conrad waiting. the white house proposing a new deal, thanks, rick. earlier on "squawk box" senator bob corker said the two sides are much further apart than is being reported. listen to this, kent. >> we're not close to a deal. and i've been trying for three weeks, i've been standing on my

head doing cart wheels to try to pivot towards entitlement reform. this is not a deal here. >> we have a clock that shows when we go over the cliff, if we add a couple of days it's when you're done smelling the stables, too, aren't you, senator? does it smell, good, retirement, or not retirement, getting out of the senate? getting close. >> getting very close. >> yeah. you heard what senator corker said. what do you make of that? >> well, i may not be an agreement that he can endorse and support but i think they are getting close to an agreement that significant majority can support. it's not going to be everything a lot of us had hoped for. certainly those that were involved in bowles-simpson, the group of six, would probably have had a bigger package. but this is significant, moving in the right direction, and i think quite close to an agreement. >> and i guess we don't even

need to speculate. maybe, i don't know, something like go to 500, do we end up at 500, a little bit less than $1.2 trillion? and kind of, these kiss your sister spending cuts kind of, senator? >> well, look, the spending restraint that's here is real. if it's 400 billion dollars on health care, that's real. if it's $200 billion on other mandatory spending, frankly, that's real. it's not as much as some of us would have done. if we would have gotten a bigger revenue package. but look, it is what it is. at the end of the day you can only do what you can do in the congress, and this is significant. i don't think it should be underplayed. there will be significant deficit reduction as part of this plan. it does mean we avoid going over the cliff. it doesn't mean we're moving in the right direction in terms of spending restraint, and disthen. so those are good things and

they're not easily achieved as readily apparent. >> are we going to be creating a second cliff as a result of this? i don't know we've got to see the details before we conclude that. it does appear they're going to clear the decks of a lot of things that have wasted an enormous amount of time here. the alternative minimum tax. how many times, joe, have we been concerned about whether the alternative minimum tax was going to come back and bite tens of millions of americans? we're going to clear the deck of that. how many times have we been worried about the fix that's going to require a 30% cut to the doctors who treat medicare eligible patients. they're going to clear the deck of that. that's going to free up this place to do other serious work that needs to be done, like fundamental tax reform which i think most of us know is badly needed. >> yeah. >> we probably want both sides really carping, so you know, so we got one side maybe we need the other. >> senator, i'm intrigued by your mention of bowls simpson

and how this didn't go far enough. so bowles-simpson had less of a tax increase than this bill, and far more spending cuts than this bill so what happens next? when do we finally get those additional spending cuts, to get back to the kind of bipartisan deal that bowles-simpson laid out? >> let me just correct you on one point. bowles-simpson had significantly more revenue than this package. significantly more revenue. >> it was three two one. >> no. i know that's what was advertised. that's not what it really was. >> the way bowles-simpson was advertised wasn't accurate f >> that's the way erskine bowles told us, senator. we asked him last week. >> you get into this whole question of baseline you're using. if we're going to be straight with people, bowles-simpson was about 60% spending cuts, 40% revenue. >> that's not true erskine bowles himself, though -- >> that's fine. >> but that's because he's using the baselines that were used in

bowles-simpson, and i am not going to take your time to bore you with the details. one thing i understand very well is how to make these comparisons accurately. he's making it on the basis of the baseline that was used at the time, that showed 3-1. on a fair comparison basis to what's being done now, it was 60% spending, 40% revenue. so, in bowles-simpson, on a fair comparison basis, instead of 1.2 trillion of revenue, 2.4 trillion dollars of revenue. that's a huge difference. and of course more spending cuts, as well. >> let's go to steve liesman who has a quote from the gop, from a gop person. >> source familiar with the negotiations. joe. that's the sourcing we have on that. they did respond to our request for a response to the white house proposal and i want to give you the full quote here. quote, our numbers are $1 trillion in spending cuts versus $1 trillion in revenue, balanced. their numbers are $1.3 trillion in revenue and $930 billion in spending cuts.

not remotely closed to balance. still quite a bridge to close there. i asked what's the difference? because, of course, the white house is saying there is $1.2 trillion in spending and the response was they are counting interest savings as spending cuts, which is a joke. another piece of a difference is as you go to that chain cpi you also affect tax brackets so there's an additional $95 billion in taxes, as well, from what the administration is counting. so, guys, where we are is not just competing proposals. but competing views of each other. >> competing math. >> of each other's proposals. >> the other thing was, i heard other people complain that the president is also proposing some increased spending. $80 billion here. >> right. >> or something like that. and those numbers hadn't been put into the proposal. >> so the movement on the president's part as i understand it, he has dropped continuation of the payroll tax cuts but apparently still there's unemployment insurance in there, and i think that $50 billion in additional infrastructure spending remains part of the

president's proposal. >> all right. senator conrad, why don't we come back with what steve was just telling us, again, you hear this, and your interpretation of what we've laid out is very different than what we've heard from senator corker just 20 minutes ago. he looked at this and said no deal. he did agree that there was movement there but he didn't think a deal would get done this week. do you? >> well, i don't know the answer to that. i would just say that obviously they're very close. look, the difference for example on interest. every bipartisan group has counted the savings on interest as a cut in spending because it is a cut in spending. so every bipartisan group has counted the interest savings as a cut in spending. that's $290 billion. that's a big part of the difference in this package. clearly that difference can be bridged. every single bipartisan has counted interest savings as a cut in spending.

including bowles-simpson. >> larry is saying it's not balanced. but i will give you absolutely that the bipartisan group used these measures and senator conrad obviously you would know as somebody who's been involved with so many of these bipartisan conferences. >> look, is there still a ways to go, and it's not insignificant? absolutely. is this a bridge that can be crossed? absolutely. is it in the nation's interest to do so? i believe it is. even though this won't be everything that many of us had hoped for. it is a significant step, and a welcome one. >> so you're familiar with all the inner workings. so there are a lot of your peers, some senators on the other side of the aisle that want the house to pass that -- the bush tax cuts for the 98% or some version of that. and then go over the cliff and then talk later. do you think that's going to happen in the house? >> i don't know. i would say this to you, i have

had two prominent republican senators come to me and say, look, we've got to go over the cliff for just a day at least so we get out from under grover norquist pledge. because, as you know, if you're past january 1st then all of these things that are talked about as tax increases are scored officially as tax cuts. and so, some republicans, at least, believe very strongly that that gets them out from under grover norquist's pledge. >> wow. >> i see why you're leaving. it's a lot of inkrutable things happening there. >> yeah, it's a lot of inkrutable things. i say this to you, the complexity of these things is far more than can ever be explained in a 30-second sound light. bite. when you get into the budget world, it's its own world and it takes real homework to understand what's really happening. but, again, i think it's important to say, this step is an important one for the country. it moves us in the right

direction. it avoids what could have been a calamity for this country. at least in terms of the economics. and it's moving us in the right direction. so, hey, we can applaud that. is there more to be done? absolutely. there will be more chances. >> all right. the right is screaming too much. i definitely want the left screaming a little bit more. i do. i want the left screaming a little bit more. they're not screaming enough. >> would you plain a little bit more? >> just wait. just wait. >> they will? >> oh, my goodness. they are going to be very, very upset with parts of this. >> really? i look forward to that. >> chained cpi. just wait. >> really? okay, now you've piqued my interest. now you got me. you had me at hello. >> okay. coming up, morning star named in the 2011 domestic stock fund manager of the year. sector picks from james kiefer and don't miss "squawk" tomorrow we're going to talk markets, the economy and the fiscal cliff with evercore partners ralph

schlosstein and leon cooperman.

welcome back to "squawk box." the futures right now are back up 50 points or so. more or less where they've been through most of the session. we are continuing our what's working series with a look at sectors to watch. in 2013. joining us now morningstar's domestic fund manager for 2011

jim kiefer. he was managing director. are you comfortable telling us what to do next year when we still don't know what's going to happen in washington? >> sure, sure, business is going to last a lot longer the next year. no problems. >> what kind of things should we be looking at? >> i think you want to be busy in the tech area. tech has been a lagger for the past year or two plus. you look at blue chip tech in particular you see some really cheap names there. very attractive valuations. think of things like cisco and oracle and microsoft, and these things are drowning in cash. you love companies that drown in cash and you're getting these in single digit multiples. i think you've really got price -- >> you really don't want them to drown. >> you want companies to drown, cash just continues to pile up. >> you want them alive. what about -- i mean, hp was one, you didn't mention hp. >> didn't mention hp. hp is a trickier situation, a lot more complex. it could be right for some investors, it's not really the right next for us. >> did you say ibm. >> ibm is not a name we own.

>> google? >> similar success. google is another same that certainly is of interest to people. >> apple? >> apple is. apple is a nice name, still. you know, it's -- >> oh, yeah? >> hey, it's back up here again so it's back to a level of interest for us again. you've got a lot of potential ahead of the company. yeah, it's not going to work perfectly every quarter for the company. i don't think that's what it's about at this price. >> okay other than tech what about anything in health care, pharmaceuticals, manufacturing, what else? >> you know, watch the falcons beat the giants and i kind of felt some pity for the giants fans and thought they should invest their times in looking the other tish organization, look at lowe's. that's a cheap name. you've got oil interests there. you've got lots of energy interests, really, and insurance names and some smart capital. you can just add up the prices, i'll even do it for you and you're getting it a lesser price than what it's selling at in the

market. >> keep going. >> flip side berkshire, you've got warren buffett saying i'll buy your shares at 1.2 times book. the smartest investor out there saying i'll take those shares away from you, and you're not willing to have ownership of them i think you're missing out on something. >> that is interesting. what about other financials? >> hatteras is a mortgage reit. a lot more controversy here. this is about steepness of the yield curve and low rates for a long time so you've got the dividend under pressure. valuation under pressure. business is under pressure. you're going to see declining dividends and so forth. beat up at a discount to book value, run by a very conservative management team that recognizes the task. they're managing it carefully, i think you'll face some pressure, won't be fun between here and call it the next six months or a year, may be that the valuation is compensating you to be on board there. >> so you kind of backed your way into an energy investment. what about just outright some plays in that -- >> apache.

apa. apache is a, you know, if you're looking for guys who are very smart, and disciplined about how they run their operation, apache is a go-to company. i mean, it is a go-to company for other companies that are looking for management players. apache has got a lot of, what do you call it, veterans have gone on to run other businesses. so apache is one who's going to manage that sector, manage what's going on in that sector very carefully. i think the valuation is interesting. >> you buy anything at this multinational big cap consumer stuff? we don't have as much in the consumer stuff. those kind of more stable businesses have been popular with folks, with the concern about the volatility in the economy, and in the market and so forth. we go into more of where if there's fear and anxiety. >> you want bigger moves. all right. jim kiefer, thank you. a lot to digest. we appreciate it. >> thank you. >> see you later. >> when we come back, we have more from our guest host larry lindsay.

we're back in just two minutes.

welcome back to "squawk box," everyone. dow futures up about 41 points. s&p futures up over 4.5 points. there are questions out there about how to characterize what's happening with the fiscal cliff. we had looked at both sides, and assumed this was movement. this was progress that the two sides were coming together. we had senator bob corker on earlier who took issue with that. he said, that may be movement, but a deal is still a long way off. we just spoke with senator kent conrad who said this is the makings of a teal from here. a lot of questions of how to characterize what we're hearing from the two sides overnight. the street is still going to be watching that. "the new york times" reports the final settlement is likely to be close to the $870 million set aside by the company. the criminal case deals with an investigation related to sales

of two anemia drugs. most of the ten whistleblowers are expected to be unsealed for the first time today. >> coming up, our guest host this morning has been larry lindsay. we'll give him the last word when "squawk box" returns. tomorrow, we'll talk the markets, the economy and fiscal cliff and more. [ male announcer ] you are a business pro. omnipotent of opportunity.

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stock of the day, arbytron, and neilsen is buying the radio ratings firm for $48 a share. about a $1.3 billion. that's a 26% premium over yesterday's close for arbytron. >> did we rate our simulcast on sirius? >> arbitron -- >> it's straight up commercial. >> yeah. >> let's get back to our guest host larry lindsay for the last word. what's your last word? >> i have a last word? >> yeah. >> i think we're going to have a lot of trouble getting to the deal. i don't think there's a lot of specifics in the president's plan. i think he made a mistake by

moving from his campaign pledge of $970 billion to 1600 and tried to come down. i think the right number is $1 trillion. that they're going to be compromising on. if they compromise, i don't think the president can go there. he doesn't have the specifics of spending cuts. i think what the house is going to do is basically pass the senate bill with a modified number. >> is corker saying all these headlines on the front pages of the papers today, we're getting closer? >> we may be getting closer, but i don't think we're going to be close enough. i really don't think in his heart the president wants a deal. i don't think he's willing to deliver the spending cuts needed -- >> maybe he can't deliver them. >> and he may not be able to deliver them. his constituents are saying they're inflexible on this. that's why i think the president was unwilling to put forward any specifics. >> there are people that want to increase what the government is doing ri